Tag: accountant

Why do we ask for your bank statements?

Posted on | by Jade Donno

Depending on which service you are on, you will find that you receive requests from members of our team asking for copies of your bank statements.  You may receive different emails from different team members depending on the work they are undertaking for you.  Whilst we try to eliminate asking for the same information on multiple jobs sometimes there are instances where information is requested more than once.  This may be sent as part of an auto request from our system, then again manually by an individual looking at your records in real-time.
We would like to clarify why you are asked for these and why it is so important they are provided to us when asked.

Why do we request copies of your bank statements?

We request copies of your bank statements to check the balances in your accounting software are correct and that all transactions have been correctly accounted for.  Many of you will have ‘bank feeds’ from your bank accounts which feed transactions directly into your accounting software.  Whilst bank feeds are usually reliable there can be instances where they drop out for security purposes or there are blips where transactions are missed or duplicated by the feed.  In order for us to spot these errors in a timely manner, and to ensure your records are always as accurate as possible, we will ask for copies of your bank statements for a given period or as at a given date to check.
If entering transactions from your bank account manually into your accounting software without bank feeds there is always a larger risk of errors – if you would like to discuss bank feeds with us or you need any help with this please get in touch.

When will we request copies of your bank statements?

Depending on your service levels with us or the nature of your business you will get asked for statements at different intervals.  This could be in relation to the following jobs:

  • Bookkeeping service (once a month)
  • Monthly Review (once a month)
  • Quarterly Review (once a quarter)
  • Year-end accounts – 3 months before your year end as a 9 month ‘Health Check’ and again once your year-end date has passed
  • Sole trader accounts and tax return – annually (unless you have our sole trader bookkeeping service)
  • Ad-hoc – if we (or you) notice there has been a problem with the bank transactions or feed we may ask for copies at unusual intervals

How do you upload your statements for us?

You will receive an email from us that looks something like the email on the right.
To upload your bank statements, you need to click on “manage checklist”. The next page will ask you to input your PIN. If this is the first time you have done this process then you will be asked to create one. If you have forgotten it, there is a link underneath to reset it.


You will then be taken to your checklist where you can upload your statements. You will also be able to see the due date, exactly what we need from you, and be able to send us a message using the comment function. There is no “submit” button, but once everything is uploaded we will be able to access it at our end and will be notified that you have uploaded your statements.
The system we use is called Karbon and it is completely cyber-secure and GDPR compliant so you do not need to worry about your information.

What happens if the bank balance in your software does not agree to your bank statements?

If we complete your bookkeeping we will identify and correct any bank issues as part of our service at no extra charge.
If you complete your own bookkeeping we will help you identify the difference.  We can complete any corrections for you for a fee (on request), or alternatively you can complete the corrections yourself. If you complete your own bookkeeping we would advise you check the bank balances in your software to the bank statements weekly ideally or monthly at the latest to make sure any error are picked up in good time. If you need any help with this or are struggling with your bookkeeping please get in touch.

The Do’s and Don’ts of pricing in a recession

Posted on | by Jade Donno

No matter how big or successful your company is, maintaining business throughout a recession is hard. With fluctuating demands, losses in sales and competitive price drops, the whole experience can feel like a rollercoaster ride. So how do you survive the economic chaos?

To help guide you through, we’ve created a comprehensive list of pricing do’s and don’ts. These tips can help you find long-term solutions to your turbulent, but hopefully temporary, problems and ensure you not only survive the recession but develop strategies to help you thrive long after.

The Do’s

Do promote your value

Unforeseen circumstances can quickly change the landscape of the economy. However, these external factors shouldn’t directly impact the value of your products or services. Therefore, we believe the best way to navigate a recession and stand out from your competitors is to focus on communicating the intrinsic value of your products and services. Through effective marketing, you can remind your clientele of your unwavering commitment to high-quality service and customer satisfaction regardless of the economic landscape.

Not to mention that it will take you a lot longer to do all your finances than a professional anyway. Why would you waste your time when you could be doing what you do best and what you actually enjoy?

Do control your costs and address inefficiencies

Controlling your prices during a recession is incredibly important. Why? Because the decisions you make during times of crisis strongly reflect your company standards and values. Make the wrong call, and it can irreparably damage your reputation and relationships with customers, which in turn will harm your sales long after the recession is over.

Instead of altering your prices to increase your profit margins or sales, focus on streamlining your companies’ processes. Address any inefficiencies, create long-term solutions and invest in your team’s development.

Do create valuable bundles

Dramatic price cuts aren’t as effective as you may think – not to mention, they’re almost always unsustainable. Instead, you want to find solutions that will accommodate your customer’s current needs without compromising the value of your products or services.

Creating valuable bundles and packages is one solution that is both reliable and sustainable. By offering a range of bundles (from low to high value), you’re able to attract a variety of customers and cater for their varying needs. As a result, you’re able to drive up sales, preserve the value of your products and services, and accommodate your cost-conscious customers throughout these difficult times.

Do keep looking ahead

Every business owner, CEO and partner knows that for a business to succeed, you must constantly be looking ahead – innovating and improving upon your current position. (Even amidst a recession, you must focus on long-term solutions.) Therefore, it’s vitally important to focus on your research and development strategies. Assess your customer’s wants and needs – ask them how you can improve and really listen. You can then use this information to improve upon and create products/services that incentivise customers to start (or continue) investing in your business.

The Don’ts

Don’t rapidly reduce your prices

There are several reasons why rapidly reducing your prices is an ineffective and ultimately damaging tactic during an economic downturn. However, we believe the most significant reasons are:

  1. You can destroy your long-term value. If you lock in a long-term price drop, you’re signaling to customers that the value of your products and services are significantly lower than your standard price point.
  2. Discounts won’t resolve your demand issues. If your products or services aren’t currently in demand, lowering your prices won’t change a thing. For example, there was little to no demand for theatre tickets at the height of the pandemic. However, since restrictions have eased, sales have returned to normal, and box offices have successfully maintained their original prices.

So don’t fall into the trap of lowering your prices – they are not the problem.

Don’t rapidly increase your prices

If you’re experiencing a sudden surge in sales – fantastic! Be grateful, not greedy. Rapidly increasing your prices when your products/services are in high demand implies that you are taking advantage of your customers and their needs. Not only will this alienate your customers and damage your reputation, but it can also lead to legal implications. So, whenever you are increasing your prices, make sure you do so ethically and sustainably.

Don’t get into a pricing war

If a competitor reduces their prices, don’t immediately assume you have to do the same. Competitive pricing will only damage your value (and your profit margins). Now, that isn’t to say you can’t develop a cheaper product or service that’s of equal value to your competitor’s offering – but you should only cheapen your services if you have adjusted their intrinsic value.

Remember, customers will respect your pricing so long as the services or products you provide are of a high standard.

Don’t focus on quality over quantity

Guiding your business through a recession is no mean feat. It takes a lot of courage to maintain your prices and values. However, this perseverance will help to preserve your reputation and uphold your high standards. So, instead of taking a reactive approach, focus on being proactive! Find long-term solutions, provide non-monetary discounts and drive sales based upon the quality of your products and services.

How accountants can make you look good

Posted on | by Jade Donno

When you as a business owner think of an accountant, you think of taxes, financial reporting, or loan applications. While this is all correct, it is just the beginning!

Accountants may be the frontrunners when it comes to your finances, but we can offer so much more than that. One of our most valuable offerings is making you look good!

Here are some ways that accountants can help you with your image:

1) They help you look professional 

Accountants can help you manage your accounts, budget smartly, and fix your cash flow, all of which are the foundations of a successful business. They can also help you to automate your business and work more efficiently.

For example, automating your invoicing system so you no longer need to chase unpaid invoices or reconcile payments manually. Not only does this save you a lot of time and free you up to focus on other areas of your business, but it also makes you look professional to your clients as they can see that you’re on top of your processes.

2) They help you remain competitive

One of the most common mistakes that business owners make is that they become too chargeable. I.e., they are not charging enough for their services. While this may bring in more business initially, in the long term, it will start choking your business growth.

By pricing correctly, you can let go of the clients who are not paying enough or who don’t align with the direction of your business. Once you start pricing what you’re worth, you’ll soon see that you will attract the right types of clients – the ones who support your growth and overall goal.

3) They help you look & feel confident

With an accountant by your side, you will be able to walk the walk as well as talk the talk. You will be making smarter business decisions such as increasing your capacity by outsourcing working rather than hiring a full-time employee, and you will have the figures you need at your fingertips. Figures that will give you, your clients, and any other third-party peace of mind.

4) They help to reassure your clients

If your business grows suddenly and takes on more clients, some of your existing clients may be worried that you can’t handle this growth, or they worry that they will become less important to you. To reassure your clients that you’re growing sustainably, an accountant can help you forecast the future and outline your business strategy. They can help you make necessary changes now so that you’re prepared for any growing pains.

Invest in your image 

A good impression of your brand is incredibly important, so invest in an accountant to make sure that you give off a positive one. From helping your business run smarter, to outlining the future for your business, an accountant can help you to reassure yourself and your clients that you will sustain value and growth for the foreseeable future.

4 Productivity Tips From 1 Accounts To Kickstart Your New Year

4 Productivity Tips To Kickstart Your New Year!

Posted on | by Jade Donno

Many people find it hard to return to work after the long Christmas and New Year slowdown, but the pandemic has slowed many people down to a halt. It may take longer than normal for some people to return to their usual productivity levels – but why stop at “usual” when things are unusual? Why not aim higher?

To help you do just that, here are 4 productivity tips to being as productive as possible when you return to work.

1. Know what you want to be different

Think about what normally happens when you start back at work. What tasks do you do that don’t really need to be done? What high-value tasks can you do instead? How much time do you usually have before things properly kick in and you’re very busy?

If you think about what you want to change so that you can start the year right, your intentions will be clear going into your first day and you’ll be far more likely to achieve what you want.

2. Identify the habits you’ll need to change

When you know your intentions (i.e. what you want to change), you then need to think about what action you will take. What steps do you need to take every day? Do you need to break bad habits that waste time and create new ones or do you just need to adapt them?

For example, if you want to develop a habit to do business development every day, try to link this to another habit that you already have. Something like, every morning after I get a cup of coffee and switch on my computer, I will do 10 minutes of engagement on LinkedIn.

3. Prioritise the right tasks

You shouldn’t have mounting emails or multiple requests from team members on your first day back, so use this time wisely. Prioritise the tasks that give you the most bang for your buck or the essentials that usually get pushed further and further down your to-do list. Plan your work for the next few months and start getting ahead.

You can even use this time to build those all-important relationships with your network. Phone up your best clients to find out how their Christmas went, let them know you’re back and to give you a shout if they need anything.

4. Don’t forget to look after yourself

Yes, looking after yourself is essential for productivity! The worst thing you can do is return to work and slot right back into the busyness and leave all those benefits that come with having a break behind. All that will do is result in you getting overwhelmed and potentially burning out after a few weeks or months. Instead, you should use this time to implement some self-care elements into your routine which you can carry on throughout the year.

Find out what works for you. Maybe it’s writing down a few things that you’re grateful for at the start of every workday. Maybe it’s going for a walk at lunch or the gym after work. Whatever helps you to focus when you’re working and switch off when you’re not, you need to make these a part of your daily work routine. What you’ll find is that you’ll keep that holiday feeling for as long as possible AND you’ll transition into a much healthier way of working where you’re far more productive.

What is a Registered Office?

Posted on | by Jade Donno

What exactly is a registered office?

A registered office is the address which your Limited Company is registered to. This is a legal requirement for all companies that are incorporated in the UK and you cannot form a company without one.

This address will be placed on the public record and will also serve as the legal postal address for letters from Companies House, HMRC, and all other government departments and agencies. It must be a physical postal address that is in the same UK jurisdiction in which your company is registered.

What is a correspondence address?

All directors and persons of significant control for your company will also have to provide a correspondence or service address. This serves a similar purpose to your company’s registered office in that it will be where HMRC, Companies house, and other government agencies send important post, and will be displayed on the public register. We usually recommend keeping the correspondence address the same as the registered office address, however it can be different it you wish.

Can I use my home address?

You can use your home address as your registered office, however if you rent your home you may need permission from your landlord. You should be aware that by doing this your personal address will appear alongside your company on the public register, so we do not recommend this for privacy reasons.

We believe that your company will also look more professional if you are not using your home address as your registered office.

Where else can I use for my registered office?

You are able to use anywhere as your registered office providing you have permission from the property owner. Here are a few ideas of spaces you could use:

  • Your own office space
  • An external company that provides this service.
  • Your home (although we wouldn’t recommend)

If you are a client of ours, you are able to use our office address. This is included in all of our limited company services.

What is a Confirmation Statement?

Posted on | by Jade Donno

Have you heard your accountant talking about your confirmation statement and been puzzled by what it is? Are you wondering about who needs to file one, when, or how?

Wonder no more! We have all the answers for you. Read on below…

What is a confirmation statement?

A confirmation statement is a yearly statement that is sent to companies house to confirm that all the information they hold about the company is correct and up to date.

This video from the government’s website contains a good overview.

Who needs to file a confirmation statement?

Every Limited Company or Limited Liability Partnership (LLP) needs to file a confirmation statement, even if they are dormant or non-trading. Sole traders and companies that have been officially struck off do not need to file a confirmation statement.

When is my confirmation statement due?

Your confirmation statement is due annually, usually around the same time as your company incorporation date. When you register a company, your 12 month review period starts. Your first confirmation statement will usually be due 14 days after the end of this 12 month review period.

You can file a confirmation statement early, if you have had some changes to the company for example. When you do this, you will start a new 12 month review period and the next confirmation statement wont be due for another 12 months.

You can check when your confirmation statement is due by searching for your company on the companies house register.

What happens if I don’t file my confirmation statement?

You will not receive a fine for missing your filing deadline, however if you do not file your statement within 14 days of the end of your review period, your company and its officers may be prosecuted. Your company can also be struck off the register for failing to file a confirmation statement.

How do I file my confirmation statement?

In order to file your confirmation statement you will need your company authentication code and your login to companies house. The government’s website has more information.

There is good news for all 1 Accounts clients however as this is included in all of our service packages! We will need to confirm with you that no details have changed (we may know this already) and you will receive an email from us once it has been filed and accepted by companies house.

What information needs to be updated?

We will have to confirm the below details are still correct before we file so we may contact you to make sure there have been no changes that you haven’t told us about. However, if you do make a change, please make sure you tell us!

We will need to confirm the following details before we file your confirmation statement

  • Company directors and shareholders are the same
  • People with significant control are the same
  • Company’s registered office is the same

You can also update the following information at the same time as filing your confirmation statement:

  • Standard Industrial Classification (SIC) code
  • Statement of capital
  • Trading status of shares
  • Exemption from keeping a PSC register
  • Shareholder information

What if nothing has changed?

If none of your company information has changed then a confirmation statement saying that nothing has changed still needs to be filed so Companies House know the information they have is still correct.

If you have any questions regarding confirmation statements please let us know! We aim to make this process as easy and stress free for our clients as possible.

Plants growing from coins

Being Green = More Green

Posted on | by Jade Donno | Leave a Comment on Being Green = More Green

Going Green = More Green

Going green can help your business in more ways than one. Making changes can seem overwhelming, but just small changes can make a difference.  Many of these changes will also help your businesses bottom line. So what are you waiting for?

How can it save me money? 

We understand that as a business owner your time is limited. However depending on the size of your business, you could save a substantial amount of money by just making a couple of small changes.

  • Switch to eco-friendly lighting – LED bulbs can use up to 30% less energy and last longer than your average bulb.
  • Use eco-friendly paper or go paperless – If you are using paper processes this can save money and time. If you are not ready to go paperless, you can reduce paper use by printing double sided and asking your team to take messages on scrap paper.
  • Reusable Products – depending on your industry you can implement using reusable products. If you are in retail, you can offer reusable bags or if you are in an office simply offer your team a reusable bottle.
  • Working from home – Allowing your team to work from home can save money heating and powering your office space. Also educating everyone to turn off their appliances before leaving the office will help cut costs too.
  • Recycle your WEEE 

Tax Incentives 

The government are trying to become carbon neutral by 2030. This will rely on businesses making changes to help make the change. Therefore they are applying tax incentives to encourage businesses to operate in an eco-friendly way.

Eco Product on peg
Reusable Bag

First Year Allowances 

This means that if you buy an asset for your business that is eco-friendly you can claim 100% capital allowances within its first year. This allows you to deduct the full cost of the item from your profits before tax. Items that qualify can be; Cars with low CO2 emissions, energy saving equipment, water saving equipment, plant and machinery for gas refusing stations, new zero-emission goods vehicles and gas, biogas and hydrogen refilling equipment. To find out more about these allowances take a look at HMRC’s website.

Electric Cars

We are expecting a high increase in clients purchasing electric cars this year due to the new benefit in kind rates. The rate for the tax year 6 April 2019 – 2020 is at 16% however the benefit in kind for the tax year 6 April 2020 to 5 April 2021 is just 2%. That could be a huge saving. Take a look at our blog on the Jaguar i-pace. 

Electric Car Charging Point

Employee Retention 

Employees are putting more and more value into sustainability. By making an effort to become eco-friendly you could both attract team members and keep them. It also creates a great team moral, as everyone can work together to achieve a goal.

Brand Reputation and Publicity 

Toms Logo

Brand awareness is becoming increasingly important. Publicising the changes your business is making to become eco-freindly can only be a good thing.

For example the shoe brand Toms uses the tag line ‘every purchase has a purpose’ and they give £1 away for every £3 of their profits.  This idea was not only very generous, but it has helped develop and create their brand.

Recycle your WEEE

Posted on | by Jade Donno | Leave a Comment on Recycle your WEEE

Recycle your WEEE

Technology is a rapidly advancing sector, with new developments and devices being made all the time. This leads to a fast turnaround of electronic equipment, but what happens to our old tech? Unfortunately, the amount of electronic technology that we throw away is also growing.

WEEE (Waste Electrical and Electronic Equipment) is the term used to define redundant or faulty electronic equipment waste produced within the UK and includes most products that have a plug or need a battery. It is estimated that the UK discards 2 million tonnes of WEEE a year.

The WEEE directive 2013 regulations define how WEEE needs to be handled, transported, refurbished and recycled. One of the key objectives of the WEEE regulations is to reduce the amount of WEEE that goes into our landfills, and a good way of doing this is through recycling schemes.

WEEE for Business Owners

Whether you are a sole trader or a large limited company, you will more than likely have at least one computer that you use to help run your business, and probably one for personal use as well. In order to keep up with the advancements in technology, it is necessary to upgrade these computers to newer models from time to time. This means at some point you will be left with an old machine to dispose of, or several old machines if you have a larger company with staff all wanting newer technology. However, in many areas, including Haverhill and West Suffolk, you should not throw away electric and electronic items in the regular waste. So how do you dispose of one or multiple computer systems legally and ethically in 2020?

One way of doing this is by selling your old laptops and computers to a recycling scheme that will either resell or recycle your old machines. Computer system recycling is an important part of The Waste Electrical and Electronic Equipment Directive (WEEE); a governmental initiative designed to reduce the amounts of waste reaching landfill. Recycling your laptops and computers is one of the most important aspects of the directive as:

  • Systems contain toxic materials & substances deemed unsuitable for landfill.
  • The Restriction of Hazardous Substances Directive (RoHS) has been brought it to tackle landfill pollution.
  • Computer system recycling is the dismantling and raw material recycling of laptop parts. Nothing goes to landfill and nothing is incinerated in the process.

If your laptop is in good condition without any cosmetic damage, it will have the highest value, however computers in worse condition can also have reasonable value. Different parts and components inside your computers such as CPU and memory can still hold value, even if the machine is very old or damaged.

This option is great because it reduces the amount of electronic equipment ending up in landfill, and you will also get the bonus of being paid for your unwanted tech.

Recycle Your Tec


Our friends at Recycle Your Tec can recycle your redundant computer systems for free, complying with the strict information security and environmental standards in the I.T recycling industry.

They offer a service which includes collection via a dedicated courier, and data wiping or destruction. All hard drives are either wiped or destroyed onsite depending on your preference and full documentation is provided to confirm the safe removal or destruction of your sensitive data.

Your unwanted systems will be carefully & properly recycled without the need to worry about pollution and permanent environmental damage. In most cases the items are reused by giving them a new home,  but some items may also have their working parts stripped out and used to repair other systems.

www.recycleyourtec.com

What about my data?

Where possible, you should reset all laptops and desktops to the default factory settings before sending them to be recycled. In theory this will leave only the operating system and pre-installed programs on the device.

It is essential to make sure you have backed up all the files you want to keep before you begin this process. Store them safely on one or more types of storage such as an external hard drive, your new computer or online cloud storage.

At Recycle You Tec your data will be completely wiped using software from White Canyon, which is certified to the standard of the US and in accordance with GDPR regulations. Full documentation is provided to confirm complete sanitation of the data held on your hard drives.

Good Service and Good for the Environment

Recycle Your Tec aim to provide first class service to individuals looking to recycle used technology, be it coming from you personally, a school, business or charity and turning them into cash donations quickly, while removing all data on the technology to comply with current data protection and environmental regulations. They accept WEEE such as laptops, PCs, tables, mobile phones and more.

  • Courier Collection.
  • Highest standard data wiping and destruction.
  • Fast payment for items.
  • Full certification.
  • Highest value for items recycled.
  • NO minimum disposal amount, all quantity no matter the size is accepted.
  • Fully accredited by the Environmental Agency.
  • T11 license holder (highest accreditation that any limited company can have that isn’t a recycling centre, such as like council-run tips)

By recycling these items not only do you give them a second home or use, but it’s good for our environment too by keeping toxic waste out of our landfills.

Better still, your business can make some money which can be put towards next year’s budget or help with buying replacement stock. Gone are the days of just giving old items away and making do with what your budget allows, sell unwanted items to us and upgrade to better technology.

Please feel free to contact Gary Ward on Gary@RecycleYourTec.com and on 01440 710700 to book a collection today.

Raised £33274.97 for St Nicholas Hospice Care

Giving Back to the Community

Posted on | by Jade Donno | Leave a Comment on Giving Back to the Community

Giving Back to the Community

As a business giving back to the community is important. The size of business or contribution is unimportant, however having a caring and socially aware ethos is paramount. Many businesses are becoming more aware of their corporate responsibilities and are focusing on their environmental efforts, fundraising events, Employee wellbeing and volunteering. To give back doesn’t have to be costly or time consuming; a small contribution will help the community, your brand and staff morale.

As a business we fall into the definition of a Micro Business. We are thankful to the businesses, people and community that has continued to support us and has helped us develop the 1 Accounts we have today.

Paul’s Inspiration 

When Sage launched the Sage Foundation Paul was really impressed that such a large global company wanted to give something back. The best part was that employees could have time off to work on a community project or for a charity of their choice. This inspired Paul to create 1 Accounts on the same ethos.

Sage Accounting accounting partner

Teach a Man To Fish

Memories are golden board

1 Accounts is based in Haverhill, Suffolk. It is so important to help our community in Haverhill. As Accountants we are often asked to be treasurer of various clubs and charities. However we would rather teach them to manage this part of their organisation themselves. We have often provided training and guidance free of charge to help. As they say “give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime”

We have also helped charities with their independent examination reports. These charities often have a special meaning to us as a Business.

Sponsorship 

We have supported national charity LPUK. Little People UK is close to our hearts as our Sales Manager Katie has Dwarfism. The LPUK helped Katie when she was younger by giving her a community of others with the same condition. In 2018 Paul rode the London 100 with two friends to raise the much needed money for the charity. Although Paul found this to be a huge challenge, he found participating for the charity very rewarding.

Volunteering 

Voulenteer postet note

This year we are taking a leaf out of the Sage Foundation book. We are going to volunteer at the Haverhill food bank Reach. This means all of us at 1 Accounts will spend a day helping them give back to our community.

St Nicholas Hospice 

Another charity we love to support is St Nicholas Hospice. The fundraising team at St Nicholas Hospice have their work cut out as the Hospice needs a phenomenal £11,000 every day to function. Last year we sponsored their Accumulator Challenge and helped raise £33274.97 for the hospice. We are proud to say we will be sponsoring again this year and hope to raise even more!

Accumulator Challenge Awards

Rehabilitation 

Paul giving a speech

Paul has also delivered talks on running a business at our local prison, Highpoint. Paul loves this as he gets some great (and honest) conversations on setting up and running a business. This takes half a day but doesn’t cost a penny to deliver.

Feeling Inspired? 

With a bit of planning and a little time, you can really help your community. The sense of belonging and wellbeing on you as a business owner and your team can be immense.

1 Accounts Haverhill Capital Gains Tax advice when selling your house.

Capital Gains rules are changing!

Posted on | by Jade Donno | Leave a Comment on Capital Gains rules are changing!

Capital Gains rules are changing!

If you are a property investor or “accidental” landlord this is the blog for you. From the 6th of April 2020 the changes to Capital Gains tax rules will affect the sale of second homes and rental properties.

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Capital Gains Tax

Capital Gains Tax is paid at the following rates:

  • 18% for the basic rate taxpayer
  • 28% for the higher rate taxpayer

The current rule means that if you sell your property in the tax year, you will pay your Capital Gains Tax in the January after it is declared on your tax return. The new rule means that you need to declare the sale to HMRC and pay the Capital Gain within 30 days of the sale. This will need to be carefully planned by unsuspecting landlords.

Get your house in order

No doubt, there will be penalties from HMRC with those who do not comply. We are keeping our fingers crossed that letting agents have informed their Landlords of these new changes.
If you are a property investor and are in the position where you have not declared your rental income, please take a look at our recent blog – “Have you received HMRC’s Love Letter?”

PPR relief

Other changes include PPR (Principle Private Residence) Relief. This is the relief that enables taxpayers to sell their homes without having to pay Capital Gains Tax. If you buy and move into a second home, the final period of exemption for PPR relief is going to be reduced from 18 months to 9 months.
This applies to Landlords that let privately. However, with the new rules starting in April and the restriction on mortgage interest, trading through a Limited Company could be the answer for property investors for the following reasons:

  • 19% Corporation Tax if you sell the property, rather than 28%.
  • Full tax relief on the interest of the loan

Pros & Cons

As with most things there are pros & cons. We can help you make informed decisions on how you want to invest and join the exciting world of being a Landlord. Despite HMRC doing their best to penalise Landlords, with the correct set up and letting partners, renting property can be very rewarding.